2G auction: more woes for Bharti and Vodafone

The telecom department wants to start the upcoming 2G auction by 11th March. In a note to the Empowered group of Ministers, which was viewed by NDTV, the telecom department wants to start the process of inviting successful bidders by 22nd February, finalise the bidders by 6th March and start the auction prices by 11th.

The telecom department wants to start the upcoming 2G auction by March 11.

In a note to the Empowered Group of Ministers (EGoM), which was viewed by NDTV, the telecom department wants to start the process of inviting successful bidders by February 22, finalise the bidders by March 6 and start the auction prices by March 11.

The EGoM is expected to meet on January 7 to take a final call on the auction dates as well as the auction rules after it failed to arrive at any decision in its last meeting on January 3.

Interestingly, the note also asks the EGoM to decide on whether another round of auction in the 1800 MHz band needs to be conducted in Kolkata or not .

Till now, 1800 MHz spectrum was supposed to be auctioned in the four circles of Delhi, Mumbai, Karnataka and Rajasthan where no bids were received in the last auctions held in November.

Under earlier rules, incumbent operators like Bharti and Vodafone, whose licences are coming up for renewal in 2014, could get spectrum in the 1800 MHz band by paying the same amount which successful bidders had paid in November

The note goes on to say that "administrative assignment in the 1800 MHz band may affect behaviour in 900 MHz auction as incumbents whose licences are expiring in 2014 may not participate if they are assigned spectrum in the 1800 MHz band up to the prescribed limit. It could affect price determination in 900 MHz also."

With this new option being considered the operators will now have to participate in the auction and win the spectrum.

In the upcoming auction, telecom companies like Bharti and Vodafone will have the option for bidding for either 900 MHz or 1800 MHZ.

The 900 MHz spectrum band is priced at twice that of 1800 MHz as it’s a more efficient spectrum band making 1800 Mhz the cheaper option for many telcos and therefore the government wants an intense competition for the 1800 MHz band. By forcing incumbents to bid in the auction the government is expecting aggressive bidding in Kolkata circle as well.

This change in rule, if agreed to by the EGoM, will make it compulsory for telecom companies like Bharti and Vodafone to participate in the upcoming auctions in all the three metros of Delhi, Mumbai and Kolkata if they want to continue providing mobile services in these 23 cities when their licences are renewed in 2014.